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The E46 BMW 3-series drives great, looks great, handles better than some sports cars and has power to spare. However, the E46 is the least reliable 3-series to roll off the line in some time.
If you're considering an autobox, go with the Mercedes. BMW and ZF still don't seem to have figured this part of a car out. Every E46 automatic owner I know has had a tranny replaced at some point.
Electrical gremlins haunt the E46. CE lights abound and ACC problems seem pretty common. For some reason they also have glitches with the cooling system, and I've heard of more than a few overheating.
You might consider instead (if BMW is your thang) one of the last E39 5-series. (Had a 1997 528i) I hear lots of good things about those cars. Keep in mind though that BMW service, especially on a 5-series, is pricey. Talking to 540 owners, the purchase price is just the beginning of the wallet opening experience...
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